1. health and fitness

Wo r k b o o k
2015 National Training Program
Module: 5
Coordination of Benefits
Centers for Medicare & Medicaid Services (CMS)
National Training Program (NTP)
Instructor Information Sheet
Module 5—Coordination of Benefits
Module Description
The lessons in this Coordination of Benefits training module explain the coordination of benefits when
people have Medicare and certain other types of health coverage.
The materials—up to date and ready to use—are designed for information givers/trainers who are
familiar with the Medicare program, and would like to have prepared information for their
presentations.
Objectives
This session should help you
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Explain health and drug coverage coordination
Determine who pays first
Identify where to get more information
Target Audience
This module is designed for presentation to trainers and other information givers. It can be easily
adapted for presentations to groups of beneficiaries.
Time Considerations
The module consists of 41 PowerPoint slides with corresponding speaker's notes, activities, and five
Check Your Knowledge questions. It can be presented in about 45 minutes. Allow approximately 15
more minutes for discussion, questions, and answers. Additional time may be allocated for add-on
activities.
Course Materials
Additional materials available:
Job Aid—Common Situations Where Medicare Pays First
Module 5: Coordination of Benefits
Contents
Introduction .......................................................................................................................................... 1
Session Overview .................................................................................................................................. 2
Lesson 1—Coordination of Benefits Overview ..................................................................................... 3
When Does Medicare Pay? ....................................................................................................... 5
When Medicare Is the Primary Payer ....................................................................................... 6
Medicare Secondary Payer ....................................................................................................... 7
Gathering Secondary Payer Information .................................................................................. 8
Gathering Secondary Payer Information From Employers ....................................................... 9
Benefits Coordination & Recovery Center .............................................................................. 10
Lesson 2—Health Coverage Coordination .......................................................................................... 12
Medicare and the Marketplace .............................................................................................. 13
Medicare and Marketplace Coordination............................................................................... 14
Important Retiree Coverage Considerations .......................................................................... 15
Possible Health Claims Payers ................................................................................................ 16
Employer Group Health Plans ................................................................................................. 17
Non-group Health Plans .......................................................................................................... 19
No-Fault Insurance .................................................................................................................. 20
Liability Insurance ................................................................................................................... 21
Workers’ Compensation ......................................................................................................... 22
Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA).................................. 23
Federal Black Lung Benefits Program ..................................................................................... 24
Consolidated Omnibus Budget Reconciliation Act (COBRA) .................................................. 25
Veterans Affairs (VA) Coverage .............................................................................................. 27
TRICARE for Life Coverage (TFL).............................................................................................. 28
Lesson 3—Medicare Part D Coordination of Benefits ........................................................................ 31
Coordination of Prescription Drug Benefits............................................................................ 32
Possible Drug Coverage Payers ............................................................................................... 33
Part D and Other Payers—Who Pays First .............................................................................. 34
Coordination of Benefits Resource Guide .......................................................................................... 39
Acronyms ............................................................................................................................................ 40
CMS National Training Program Contact Information........................................................................ 41
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Module 5 explains the Coordination of Benefits when people have Medicare and certain other types of
health coverage.
This training module was developed and approved by the Centers for Medicare & Medicaid Services
(CMS), the federal agency that administers Medicare, Medicaid, the Children’s Health Insurance
Program (CHIP), and the Federally-facilitated Health Insurance Marketplace.
The information in this module was correct as of May 2015. To check for an updated version, visit
CMS.gov/outreach-and-education/training/cmsnationaltrainingprogram/index.html.
The CMS National Training Program provides this as an informational resource for our partners. It’s not
a legal document or intended for press purposes. The press can contact the CMS Press Office at
[email protected]. Official Medicare program legal guidance is contained in the relevant statutes,
regulations, and rulings.
1
This session should help you



Explain health and drug coverage coordination
Determine who pays first
Identify where to get more information
2
Lesson 1, “Coordination of Benefits Overview,” covers the following:
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Coordination of Benefits
Medicare as the Primary Payer
Medicare Secondary Payer
3
If you have Medicare and other health coverage, each type of coverage is called a payer. When there’s
more than one payer, coordination of benefits rules decide which pays first. The primary payer pays
what it owes on your bills first, and then your provider sends the rest to the secondary payer to pay. In
some cases there may also be a third payer.
4
Medicare can be the primary payer, the secondary payer, or sometimes other insurance plans should
pay and Medicare shouldn’t pay at all.
Medicare may be the primary payer if you don’t have other insurance, or if Medicare is primary to your
other insurance.
Medicare may be the secondary insurance payer in situations where Medicare doesn’t provide your
primary health insurance coverage, or when another insurer is primarily responsible for paying.
Medicare may not pay at all for services and items that other health insurers are responsible for paying.
5
For most people with Medicare, Medicare is their primary payer, which means Medicare pays first on
their health care claims. Medicare pays first in the following situations:
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Medicare is your only source of medical, hospital, or drug coverage.
You have a Medigap (Medicare supplement insurance) policy or other privately purchased
insurance policy that isn’t related to current employment. This type of policy covers amounts not
covered by Medicare.
Coverage through Medicaid and Medicare (dual eligible beneficiaries), with no other coverage that
could be primary to Medicare.
Retiree coverage, in most cases. To know how a plan works with Medicare, check the plan’s benefits
booklet or plan description provided by the employer or union, or call the benefits administrator.
Health care services provided by the Indian Health Service.
Veterans benefits.
TRICARE. (Note: TRICARE is the U.S. Department of Defense health program for active-duty service
members and their families. TRICARE for Life is the program for military retirees and their families.)
Coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), with one exception:
End-Stage Renal Disease. We’ll talk about this coverage shortly.
6
Medicare Secondary Payer (MSP) is the term generally used when Medicare isn’t responsible for paying
a claim first.
When Medicare began in 1966, it was the primary payer for all claims except for those covered by
workers’ compensation, Federal Black Lung Benefits Program benefits, and U.S. Department of
Veterans Affairs benefits.
In 1980, Congress passed legislation that made Medicare the secondary payer to certain primary plans
in an effort to shift costs from Medicare to the appropriate private sources of payment.
The MSP provisions have protected Medicare’s Trust Funds by making sure that Medicare doesn’t pay
for services and items that certain health insurance or coverage is primarily responsible for paying. The
MSP provisions apply to situations when Medicare isn’t the beneficiary’s primary health insurance
coverage.
Medicare saves almost $9 billion annually on claims processed by insurances that pay primary to
Medicare.
7
If you’re already getting Social Security benefits (for example, getting early retirement), you’ll
automatically be enrolled in Medicare Part A and Part B without an additional application. Three
months before Medicare coverage begins, you’re sent a notice asking you to complete the Initial
Enrollment Questionnaire online. It asks the questions below about other health insurance you have,
like group health coverage from your or a family member’s employer, liability insurance, or workers’
compensation.
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Do you have any group health plan coverage through your current employer?
How many employees, including yourself, work for your employer?
Does your employer group health plan cover prescription drugs?
Will you be getting any group health plan coverage through the current employment of your
husband/wife on your Medicare eligibility date?
How many employees work for your husband’s or wife’s employer?
Are you receiving Federal Black Lung Benefits Program benefits or workers’ compensation benefits?
Are you receiving treatment for an injury or illness that another party could be held responsible for,
or could be covered under no-fault, automobile, or liability insurance?
If you’re not getting retirement benefits from Social Security or Railroad Retirement Board, you must
sign up to get Medicare. As a new Medicare enrollee, you’re automatically registered to use the
MyMedicare.gov website, which is Medicare’s secure online service that allows you, or your designee,
to access your personal Medicare information, health care claims, preventive services information,
Medicare Summary Notices, and more. You may complete the questionnaire online at MyMedicare.gov,
or over the phone by calling the Benefits Coordination & Recovery Center at 1-855-798-2627. TTY users
should call 1-855-797-2627.
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Coordination of benefits relies on multiple databases kept by several stakeholders, including federal
and state programs, plans that offer health insurance and/or prescription coverage, pharmacy
networks, and a variety of assistance programs available for special situations and/or conditions.
Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 added mandatory reporting
requirements for group health plan (GHP) arrangements and for liability insurance, including selfinsurance, no-fault insurance, and workers’ compensation. Insurers are legally required to provide
information.
Penalties of up to $1,000 per day/per beneficiary may be incurred for failure to report data.
Stakeholders must use a secure web portal to facilitate the transfer of data.
Internal Revenue Service (IRS)/Social Security (SSA)/Centers for Medicare & Medicaid Services (CMS)
Claims Data Match—The law requires the IRS, SSA, and CMS to share information about Medicare
beneficiaries and their spouses. A key data source is the IRS/SSA/CMS Claims Data Match. By law,
employers are required to complete a questionnaire on the GHP that Medicare-eligible workers and
their spouses choose. The Claims Data Match identifies situations where another payer is primary to
Medicare.
Voluntary Data-Sharing Agreements (VDSAs)—CMS has entered into VDSAs with numerous large
employers. These agreements allow employers and CMS to send and receive GHP enrollment
information electronically. Where discrepancies occur in the VDSAs, employers can provide
enrollment/disenrollment documentation. The VDSA program includes Part D information, letting VDSA
partners submit records with prescription drug coverage, be it primary or secondary to Medicare
prescription drug coverage (Part D).
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The Coordination of Benefits program identifies the health benefits available to a Medicare beneficiary,
and coordinates the payment process to prevent mistaken payment of Medicare benefits.
Medicare eligibility data is shared with other payers and Medicare-paid claims are transmitted to
supplemental insurers for secondary payment. An agreement must be in place between the Centers for
Medicare & Medicaid Services (CMS) Benefits Coordination & Recovery Center (BCRC) and private
insurance companies for the contractor to automatically cross over medical claims. In the absence of an
agreement, the person with Medicare is required to coordinate secondary or supplemental payment of
benefits with any other insurers he or she may have in addition to Medicare. Plans are ensured that the
amount paid in dual coverage situations doesn't exceed 100% of the total claim, avoiding duplicate
payments.
The BCRC initiates an investigation when it learns that a person has other insurance. The investigation
determines whether Medicare or the other insurance has primary responsibility for meeting the
beneficiary's health care costs. The goal of these MSP information-gathering activities is to identify MSP
situations quickly, ensuring correct payments by the responsible parties.
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Check Your Knowledge—Question 1
How many possible different payers could there be for an insurance claim?
a. One
b. Two
c. Three
ANSWER: c. Three.
The primary payer pays what it owes on your bills first, and then your provider sends the rest to the
secondary payer to pay. In some cases there may also be a third payer.
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Lesson 2, “Health Coverage Coordination,” explains the following:
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Medicare and the Marketplace
Important Considerations
Identifying Appropriate Payers
Determining Who Pays First
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Medicare isn’t part of the Health Insurance Marketplace, so if you have Medicare Part A you don’t need
to do anything related to the Marketplace; you’re considered covered. No matter how you get
Medicare, whether through Original Medicare or a Medicare Advantage Plan (like a Health
Maintenance Organization or a Preferred Provider Organization), you won’t have to make any changes
related to the Marketplace. If you have Medicare, it’s illegal for someone to sell you a Marketplace
plan.
NOTE: You may have Medicare and Marketplace coverage concurrently, only if you had your
Marketplace coverage before you had Medicare.
13
Generally, there is no coordination of benefits between Medicare and an Individual Marketplace
Qualified Health Plan (QHP) that you purchase through the Health Insurance Marketplace. There are
several important factors to consider when you’re making the decision about whether or not to remain
in a QHP after you enroll in Medicare Part A.
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The QHP isn’t secondary insurance, and it isn’t required to pay any costs toward your coverage if
you have Medicare.
Individual Marketplace coverage isn't employer-sponsored coverage and it’s not based on current
employment. If you have individual Marketplace coverage and only enroll in Part A during your
Medicare Initial Enrollment Period, you won’t be able to enroll in Part B later using a Special
Enrollment Period. You will have to wait for the General Enrollment Period (January 31–March 31
each year) and you will have to pay a lifetime Part B penalty if you went without Part B for more
than 12 months.
Once your Part A coverage starts, any premium tax credits and reduced cost-sharing you may have
qualified for through the Marketplace will stop. That’s because Part A is considered minimum
essential coverage, not Part B.
You may decide to choose Marketplace coverage instead of Medicare if you have to pay a premium for
Part A. If you’re paying a premium for Part A, you can drop your Part A and Part B coverage and get a
Marketplace plan instead. If you only have Part B and would have to pay a premium for Part A, you can
drop Part B and get a Marketplace plan instead.
Only individuals enrolled in the Small Business Health Options Program (SHOP) program in the
Marketplace will have coordination of benefits, because that coverage is based on current
employment. These individuals have group health plan coverage and Medicare will pay secondary to
the QHP coverage. In addition, these individuals can consider delaying Part B enrollment (without
penalty) because SHOP employer-sponsored coverage is based on current employment.
14
As discussed previously, people with Medicare who have employer or union retirement plans that cover
prescription drugs must carefully consider their options. A person’s needs may vary from year to year
based on factors like health status and financial considerations. Options provided by employer or union
retirement plans can also vary each year. Each plan is required by law to annually disclose to its
members how it works with Medicare prescription drug coverage. If a person with Medicare loses
“creditable” drug coverage, he/she has 63 days to enroll in a Part D plan without incurring a late
enrollment penalty. Contact the employer group health plans benefits administrator for information,
including how it works with Medicare drug coverage. Creditable coverage is coverage that is expected
to pay, on average, at least as much as Medicare’s standard prescription drug coverage.
When making a decision on whether to keep or drop coverage through an employer or union
retirement plan, there are some important points to consider:
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Most employer/union retirement plans offer prescription coverage comparable to Medicare drug
coverage, and often generous hospitalization and medical insurance for the entire family, which is
particularly important for those who are chronically ill or have frequent hospitalizations.
If you drop retiree group health coverage, you may not be able to get it back.
If you drop drug coverage, you may also lose doctor and hospital coverage.
Family members covered by the same policy may also be affected, so any decision about drug
coverage should consider the entire family’s health status and coverage needs.
15
It’s important to identify whether your medical costs are payable by other insurance before, or in
addition to, Medicare. This information helps health care providers determine whom to bill and how to
file claims with Medicare.
There are many insurance benefits you could have and many combinations of insurance coverage to
consider before determining who pays and when:
 No-Fault Insurance
 Liability Insurance
 Retiree Group Health Plan
 Veterans Affairs Benefits
 Employer Group Health Plan
Depending on the type of additional insurance coverage a person may have, Medicare may be the
primary payer or secondary payer for your claim, or may not pay at all.
16
Coordination of benefits is dependent on whether you, or your spouse or family member, is currently
working or retired, and on the number of employees of that company. The Federal Employee Health
Benefits program is a type of employer group health plan (EGHP).
EGHP coverage is coverage offered by many employers and unions for current employees and/or
retirees. You may also get group health coverage through your spouse’s or other family member’s
employer. If you have Medicare and are offered coverage under an EGHP, you can choose to accept or
reject the plan. The EGHP may be a fee-for-service plan or a managed care plan, like a Health
Maintenance Organization.
Businesses with 50 or fewer employees or fewer can offer Small Business Health Options Program
(SHOP) plans.
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When does Medicare pay first for people with employer group health plans?
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If you're 65 or older and have retiree coverage
If you're 65 or older with Employer Group Health Plan (EGHP) coverage through current
employment, either yours or your spouse’s, and the employer has less than 20 employees
If you're under 65, have a disability, and are covered by an EGHP through current employment
(either yours or a family member’s), and your employer has less than 100 employees
If you're eligible for Medicare due to End-Stage Renal Disease (ESRD) and you have EGHP coverage,
either yours or your spouse’s, and the 30-month coordination period has ended, or if you had
Medicare as your primary coverage before you had ESRD
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Medicare doesn’t usually pay for services when the diagnosis indicates that other insurers may provide
coverage, including the following:
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Auto accidents
Illness related to mining (Federal Black Lung Benefits Program)
Third-party liability
Work-related injury or illness (workers’ compensation)
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No-fault insurance is insurance that pays for health care services resulting from personal injury or
damage to someone’s property regardless of who’s at fault for causing it. Types of no-fault insurance
include the following:
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Automobile insurance
Homeowners’ insurance
Commercial insurance plans
Medicare is the secondary payer where no-fault insurance is available. Medicare generally won’t pay
for medical expenses covered by no-fault insurance. However, Medicare may pay for medical expenses
if the claim is denied for reasons other than not being a proper claim. Medicare will make payment only
to the extent that the services are covered under Medicare. Also, if the no-fault insurance doesn’t pay
promptly (within 120 days), Medicare may make a conditional payment. A conditional payment is a
payment for which Medicare has the right to seek recovery.
The money that Medicare used for the conditional payment must be repaid to Medicare when the nofault insurance settlement is reached. If Medicare makes a conditional payment and you later resolve
the insurance claim, Medicare will seek to recover the conditional payment from you. You’re
responsible for making sure that Medicare gets repaid for the conditional payment.
The Medicare Modernization Act of 2003 (P.L. 108-173, Title III, Sec. 301) further clarifies language
protecting Medicare’s ability to seek recovery of conditional payments.
Part D plans will pay for covered prescriptions that aren’t related to the accident or injury.
20
Liability insurance is coverage that protects you against claims based on negligence, inappropriate
action, or inaction that results in injury to someone or damage to property. Liability insurance includes,
but isn’t limited to, the following:
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Homeowners’ liability insurance
Automobile liability insurance
Product liability insurance
Malpractice liability insurance
Uninsured motorist liability insurance
Underinsured motorist liability insurance
Medicare is the secondary payer in cases where liability insurance is available. If health care
professionals find that the services they gave a person can be paid by a liability insurer, they must
attempt to collect from that insurer before billing Medicare. Providers are required to bill the liability
insurer first, even though the liability insurer may not make a prompt payment.
Sometimes this can take a long time. If the insurance company doesn’t pay the claim promptly (usually
within 120 days), your doctor or other provider may bill Medicare. Medicare may make a conditional
payment to pay the bill. A conditional payment is a payment Medicare makes for services for which
another payer is responsible. Medicare makes this conditional payment so you won’t have to use your
own money to pay the bill. The payment is conditional because it must be repaid to Medicare when a
settlement judgment, award, or other payment is made.
21
Medicare generally won’t pay for an injury or illness/disease covered by workers’ compensation. If all
or part of a claim is denied by workers’ compensation on the grounds that it isn’t covered by workers’
compensation, a claim may be filed with Medicare. Medicare may pay a claim that relates to a medical
service or product covered by Medicare if the claim isn’t covered by workers’ compensation.
Workers' compensation claims can be resolved by settlements, judgments, or awards.
22
A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that
allocates a portion of a workers’ compensation settlement to pay for future medical services related to
the workers’ compensation injury, illness, or disease.
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Money placed in your WCMSA is only for paying future medical and/or prescription drug expenses
related to your work injury, illness, or disease, and only if the expense is for a treatment that
Medicare would cover.
You can't use the WCMSA to pay for any other work injury, or any medical items or services that
Medicare doesn't cover (for example, dental services).
If you’re not sure what type of services Medicare covers, call 1-800-MEDICARE (TTY 1-877-4862048) before you use any of the money that was placed in your WCMSA.
After you use all of your WCMSA money appropriately, Medicare can start paying for Medicarecovered services related to your work-related injury, illness, or disease.
WCMSAs are discussed in detail at go.cms.gov/wcmsa.
See Section 1862(b)(2) of the Social Security Act of 1954 (42 USC 1395y(b)(2)).
23
Some people with Medicare can get Federal Black Lung Benefits Program medical benefits for services
related to lung disease and other conditions caused by coal mining. Medicare doesn’t pay for health
services covered under this program. Black lung claims are considered workers’ compensation claims.
All claims for services that relate to a diagnosis of black lung disease are referred to the Division of Coal
Mine Workers’ Compensation in the U.S. Department of Labor.
However, if the services aren’t related to black lung, Medicare will serve as the primary payer if all the
following are true:
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There is no other primary insurance
The individual is eligible for Medicare
The services are covered by the Medicare program
Federal Black Lung Benefits Program beneficiaries are eligible for prescription drugs, inpatient and outpatient services, and doctors’ visits. In addition, home oxygen and other medical equipment, home
nursing services, and pulmonary rehabilitation may be covered with a doctor’s prescription.
A toll-free number, 1-800-638-7072, has been designated for the office that’s responsible for the
Federal Black Lung Benefits Program’s medical diagnostic and treatment services. TTY users should call
1-877-889-5627.
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The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more
employees to let employees and their dependents keep their health coverage for a time after they leave
their employer group health plan, under certain conditions. This is called COBRA “continuation coverage.”
The law applies to private sector and state and local government–sponsored plans, but not to federal
government–sponsored plans, the governments of the District of Columbia, any territory or possession of
the United States, or to certain church-related organizations. The Federal Employee Health Benefits
Program is subject to similar temporary continuation-of-coverage provisions under the Federal Employees
Health Benefits Amendments Act of 1988.
COBRA coverage can begin due to certain events, such as loss of employment or reduced working hours,
divorce, death of an employee, or a child ceasing to be a dependent under the terms of the plan. For loss of
employment or reduced working hours, COBRA coverage generally continues for 18 months. Certain
disabled individuals and their non-disabled family members may qualify for an 11-month extension of
coverage from 18 to 29 months. Other qualifying events call for continued coverage up to 36 months.
Group health coverage for COBRA participants is usually more expensive than health coverage for active
employees, since the participant pays both his/her part and the part of the premium his/her employer paid
while he/she still worked.
You can replace COBRA coverage with Marketplace coverage. If your COBRA coverage ends outside the
annual Marketplace Open Enrollment Period (November 1, 2015 – January 31, 2016), you may qualify for a
Special Enrollment Period (SEP). To find out if you qualify for an SEP, visit HealthCare.gov/coverage-outsideopen-enrollment/. This means you can enroll in a private health plan through the Marketplace outside of
Open Enrollment. If you end your COBRA coverage early and you are outside the annual Open Enrollment
Period, you can’t enroll in a Marketplace plan at all. During the annual Open Enrollment Period, you can
drop your COBRA coverage and get a plan through the Marketplace, even if your COBRA coverage hasn’t
run out.
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Medicare usually pays primary to Consolidated Omnibus Budget Reconciliation Act (COBRA)
continuation coverage for aged and disabled individuals. Medicare pays secondary to COBRA for
individuals with End-Stage Renal Disease (ESRD) during the 30-month coordination period.
Before electing COBRA coverage, people may find it helpful to talk with a State Health Insurance
Assistance Program (SHIP) counselor to understand their options better. For example, if a person who
already has Medicare Part A (Hospital Insurance) chooses COBRA, but waits to sign up for Medicare
Part B (Medical Insurance) until the last part of the 8-month Special Enrollment Period following
termination of employment, the employer can make the person pay for services that Medicare
would’ve covered if he or she had signed up for Part B earlier.
In some states, SHIP counselors can also provide information about time frames on COBRA and
Medigap guaranteed issue rights in a given state. Time frames may differ depending on state law.
Medicare Part D plans generally pay first before COBRA coverage for people 65 and older and those
who have a disability.
Medicare Part D pays first, if you have COBRA and have ESRD, once you’re out of your 30-month
coordination period.
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If you have both Medicare and Veterans’ benefits, you can access health care treatment under either
program. However, you must choose which benefit you’ll use each time you see a doctor or receive
health care (e.g., in a hospital). Medicare won’t pay for the same service that was authorized by
Veterans Affairs (VA); similarly, VA coverage won’t pay for the same service that was covered by
Medicare.
To receive VA services, you must get your health care at a VA facility or have the VA authorize services
in a non-VA facility. Veterans could be subject to a penalty for enrolling late for Medicare Part B, even if
they’re enrolled in VA health care.
VA benefits are given to people who served in the active military, naval, or air service and were
honorably discharged or released, or were/are a Reservist or National Guard member and were called
to active duty by a federal order (for other than training purposes) and completed the full call-up
period.
Veterans of the United States Armed Forces may be eligible for a broad range of programs and services
provided by VA. Eligibility for most VA benefits is based on the service member’s discharge from active
military service under other than dishonorable conditions. Active service means full-time service, other
than active duty for training, as a member of the Army, Navy, Air Force, Marine Corps, Coast Guard, or
as a commissioned officer of the Public Health Service, Environmental Science Services Administration,
or National Oceanic and Atmospheric Administration.
27
If you have Medicare and TRICARE for Life (TFL), Medicare is your primary insurance. TFL acts as your
secondary payer, minimizing your out-of-pocket expenses. TFL benefits include covering Medicare’s
coinsurance and deductibles.
If you use a Medicare provider, he or she will file your claims with Medicare. Medicare pays its portion
and electronically forwards the claim to the TFL claims processor. TFL pays the provider directly for TFLcovered services.
For services covered by both Medicare and TFL, Medicare pays first and TFL pays the remaining
coinsurance for TRICARE-covered services.
For services covered by TFL but not by Medicare, TFL pays first and Medicare pays nothing. You must
pay the TFL fiscal year deductible and cost shares.
For services covered by Medicare but not by TFL, Medicare pays first and TFL pays nothing. You must
pay the Medicare deductible and coinsurance.
For services not covered by Medicare or TFL, Medicare and TFL pay nothing and you must pay the
entire bill.
When you receive services from a military hospital or any other federal provider, TFL will pay the bills.
Medicare doesn’t usually pay for services received from a federal provider or other federal agency.
NOTE: TFL is coverage for all TRICARE beneficiaries who have both Medicare Part A and Part B. Activeduty personnel are covered by TRICARE insurance. Coordination of benefits situations concerning
TRICARE should be handled like other employer group health plans.
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Check Your Knowledge—Question 2
Which of the following is a true statement about Workers’ Compensation Medicare Set-Aside
Arrangement (WCMSA) funds?
a.
b.
c.
d.
WCMSA funds can be used to cover all medical expenses
WCMSA funds must be used within 1 year
WCMSA funds can be used to cover prescription drug expenses
Medicare will pay for all Medicare-approved expenses after all WCMSA funds are used
ANSWER: d. Medicare will pay for all Medicare-approved expenses after all WCMSA funds are used
Why isn’t answer “a” correct? Funds placed in your WCMSA is for paying future medical and/or
prescription drug expenses related to your work injury or illness/disease that otherwise would have
been covered by Medicare.
Why isn’t answer “b” correct? Funds placed in your WCMSA may be used to pay future medical and/or
prescription drug expenses related to your work injury or illness/disease, that otherwise would have
been covered by Medicare, until those funds have been used up (“exhausted” or “depleted”).
Why isn’t answer “c” correct? You can't use the WCMSA to pay for prescription drugs that aren’t
related to your work injury or illness.
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Check Your Knowledge—Question 3
Who pays John’s bill first? He is 34 years old. He has End-Stage Renal Disease (ESRD), Consolidated
Omnibus Budget Reconciliation Act (COBRA) coverage, and has been enrolled in Medicare for 8
months.
a. Medicare
b. COBRA
ANSWER: b. COBRA
For people with ESRD, COBRA pays first and Medicare pays second during the 30-month coordination
period. COBRA coverage generally continues for 18 months. Medicare will become primary payer when
COBRA coverage ends, even if that happens before the 30-month period ends.
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Lesson 3, “Medicare Part D Coordination of Benefits,” explains the following:



Coordination of Prescription Drug Benefits
Other Possible Payers
When Part D Pays First
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Generally, Medicare Part D provides primary coverage for prescription drugs. Whenever Medicare is
primary, the Part D (Medicare prescription drug coverage) plan is billed and will pay first. When
Medicare is the secondary payer, Part D plans will generally deny primary claims.
When Medicare is the secondary payer to a non-group health plan, or when a plan doesn’t know
whether a covered drug is related to an injury, Part D plans will always make a conditional primary
payment, unless certain situations apply. The Part D plan won’t pay if it’s aware that the enrollee has
workers’ compensation, Federal Black Lung Benefits Program benefits, or no-fault/liability coverage and
has previously established that a certain drug is being used exclusively to treat a related illness or
injury.
For example, when an enrollee refills a prescription previously paid for by workers’ compensation, the
Part D plan may deny primary payment and default to Medicare Secondary Payer. The payment is
conditional because it must be repaid to Medicare once a settlement, judgment, or award is reached.
The proposed settlement or update should be reported to the Benefits Coordination & Recovery
Center.
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There are a number of possible drug coverage payers.
Employer Group Health Plans



Retiree
Active employment
Consolidated Omnibus Budget Reconciliation Act
State



Medicaid programs
State Pharmaceutical Assistance Programs
Workers’ compensation
Federal






Medicare Parts A or Part B (limited)
Federal Black Lung Benefits Program
Indian Health Service
Veterans Affairs
TRICARE for Life
AIDS Drug Assistance Programs
Other



No-Fault\Liability
Patient Assistance Programs
Charities
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Part D (Medicare prescription drug coverage) usually pays first if you have retiree coverage.
Medicare Part D pays first also for



Working-aged individuals 65 and older (they or their covered spouse is still working) with Medicare
and an employer group health plan (EGHP) with fewer than 20 employees
A person with a disability with an EGHP with 100 or less employees
A person with End-Stage Renal Disease with an EGHP of any size after a 30-month coordination
period
NOTE: The Federal Employee Health Benefits (FEHB) program is a type of EGHP. It covers participating
current and retired federal employees. There is usually not much benefit to having Part D and FEHB
coverage, unless you qualify for Extra Help. If you have both, and are retired, Part D would pay first.
Part D (Medicare prescription drug coverage) generally pays first before Consolidated Omnibus Budget
Reconciliation Act (COBRA) coverage for people 65 and older and those who have a disability.
Medicare Part D pays first if you have COBRA and have End-Stage Renal Disease, once you’re out of
your 30-month coordination period.
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If you get Federal Black Lung Benefits Program, Part D (Medicare prescription drug coverage) won’t
cover prescriptions related to lung disease and other conditions caused by coal mining.
Many Indian health facilities participate in the Medicare prescription drug program. If you get
prescription drugs through an Indian health facility, you pay nothing, and your coverage won’t be
interrupted. Coordination of benefits with Indian Health Services (IHS) and Tribes is tied to pharmacy
network contracting. Regulations require all Part D sponsors to offer network contracts to all IHS,
tribes and tribal organizations, and urban Indian organization (I/T/U) provider pharmacies operating in
their service area.
Veterans Affairs (VA) benefits, including prescription drug coverage, are separate and distinct from
benefits provided under Part D (Medicare prescription drug coverage). Legally, the VA can’t bill
Medicare. You may be eligible to receive VA prescription drug benefits and enroll in a Part D plan, but
you can’t use both benefits for a single prescription. VA prescriptions generally must be written by a VA
doctor and can only be filled in a VA facility or through VA’s Consolidated Mail Outpatient Pharmacy
operations. The VA doesn’t fill prescriptions for Part D sponsors. Since VA prescription drug coverage is
creditable coverage, you won’t face a penalty if you delay enrollment in a Part D plan. However, if you
get less than full VA prescription drug benefits, you may benefit from enrollment in a Part D plan—
particularly if you’re eligible for Extra Help.
TRICARE for Life (TFL) coverage includes prescription drug benefits. These benefits qualify as creditable
coverage. People with TFL don’t need to enroll in a Medicare Part D plan when they have the TFL
pharmacy benefit. If they choose to enroll in a Medicare Part D plan at a later date, they won’t be
charged a late enrollment penalty.
Under the Medicare Modernization Act (MMA), if you have both Medicare and full Medicaid benefits
(called “full-benefit dual eligibles”) you receive drug coverage from Medicare instead of Medicaid.
States may choose to provide Medicaid coverage of drugs the MMA excludes from Part D coverage.
Some Medicare Special Needs Plans coordinate Medicare-covered services, including prescription drug
coverage, for people with both Medicare and Medicaid.
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If you get help from a State Pharmaceutical Assistance Program, Medicare Part D pays first.
If you’re covered under workers’ compensation, Part D will pay first for covered prescriptions that
aren’t related to the job-related illness or injury. Part D plans will always make a “conditional” primary
payment to ease the burden on the policyholder, unless certain situations apply. The Part D plan won’t
pay if it’s aware that the enrollee has workers’ compensation, Federal Black Lung Benefits Program, or
no-fault/liability coverage and has previously established that a certain drug is being used exclusively to
treat a related illness or injury.
For example, if you refill a prescription previously paid for by workers’ compensation, the Part D plan
may deny primary payment and default to Medicare secondary payer. The payment is “conditional”
because it must be repaid to Medicare once a settlement, judgment, or award is reached.
Medicare Part D plans pay first for medically necessary Part D covered prescriptions, and manufacturersponsored patient assistance programs and charities can help you with the remaining costs. Charitable
program members may present a retail ID card at the point of sale to get financial assistance.
If you’re covered by no-fault/liability insurance, such as for an automobile accident, injury in a public
place, or malpractice, Part D pays first for prescriptions covered by Part D that aren’t related to the
accident or injury.
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Check Your Knowledge—Question 4
It’s important to make an informed decision about whether to keep or drop coverage through an
employer or union retirement plan because
a.
b.
c.
d.
If you drop retiree group health coverage you may not be able to get it back
If you drop drug coverage you may also lose doctor and hospital coverage
Family members covered by the same policy may also be affected
All the above
ANSWER: d. All of the above.
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Check Your Knowledge—Question 5
For people covered by Medicare and full Medicaid benefits who have a medical issue that’s covered by
workers’ compensation insurance:
a.
b.
c.
d.
Medicaid pays for all prescriptions
Medicare pays for prescriptions other than those for the job-related injury or illness
Medicare pays for all prescriptions
Medicaid pays for prescriptions other than those for the job-related injury or illness
ANSWER: b. Medicare pays for prescriptions other than those for the job-related illness or injury
The Medicare Modernization Act established that people with both Medicare and full Medicaid
benefits will receive drug coverage from Medicare rather than Medicaid.
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Coordination of Benefits Resource Guide
39
Acronyms
BCRC
Benefits Coordination & Recovery Center
CHIP
Children’s Health Insurance Program
CMS
Centers for Medicare & Medicaid Services
COB
Coordination of Benefits
COBRA
Consolidated Omnibus Budget Reconciliation Act
EGHP
Employer Group Health Plan
ESRD
End-Stage Renal Disease
FEHB
Federal Employee Health Benefits
GHP
Group Health Plan
IHS
Indian Health Services
IRS
Internal Revenue Service
I/T/U
Indian Health Service, Tribal, and Urban Indian
MMA
Medicare Modernization Act
MSP
Medicare Secondary Payer
NTP
National Training Program
QHP
Qualified Health Plan
SHIP
State Health Insurance Assistance Program
SHOP
Small Business Health Options Program
SPAP
State Patient Assistance Program
SSA
Social Security
TFL
TRICARE for Life
VA
Veterans Affairs
VDSA
Voluntary Data-Sharing Agreement
WCMSA
Workers’ Compensation Medicare Set-aside Arrangement
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This training module is provided by the CMS National Training Program (NTP).
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activities, and webinar and workshop schedules, or to subscribe to our email list, visit
CMS.gov/outreach-and-education/training/cmsnationaltrainingprogram. For questions about these
training products, email [email protected].
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